4ts02:20:21eBookYour firm has an average collection period of 38 days. Current practice is to factor allreceivables immediately at a discount of 1.9 percent. Assume that default is extremelyunlikely. What is the effective cost of borrowing? (Do not round intermediatecalculations and enter your answer as a pecent rounded to 2 decimal places, e.g.,32.16.)Effective cost of borrowing18.65 % 3602:20:34ippedBookHintPrinterencesConsider the following financial statement information for the Newk Corporation:ItemBeginning$ 10,500InventoryAccounts receivable5,5007,700Accounts payableCredit salesCost of goodssold$ 85,00065,000Operating cycleCash cycleCalculate the operating and cash cycles. (Use 365 days a year. Do not roundintermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)Ending$ 11,5005,8008,100daysdays

An Accounts payable turnover indicates the efficiency of the firm in managing its payables.A high…

Your firm has an average collection period of 38 days. Current practice is to factor all receivables immediately at a discount of 1.9 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (Do not round intermediate calculations and enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.)

Your firm has an average collection period of 38 days. Current practice is to factor all receivables immediately at a discount of 1.9 percent. Assume that default is extremely unlikely. What is the effective cost of borrowing? (Do not round intermediate calculations and enter your answer as a pecent rounded to 2 decimal places, e.g., 32.16.)

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The amount of simple interest on a deposit varies jointly with the principal and the time in days. If $17.85 is earned on a deposit of $3500 for 12 days, how much interest would be earned on a deposit of $3700 for 20 days? ... The deposit would earn S in interest. (Simplify your answer. Round to the nearest cent as needed.)
Simmons Corporation can borrow from its bank at 21 percent to take a cash discount. The terms of the cash discount are 2.5/14, net 50. Compute the cost of not taking the cash discount. Note: Use a 360-day year. Do not round intermediate calculations. Input your final answer as a percent rounded to 2 decimal places.
PanAir Reservations (PAR) borrowed $270,000 for 36 days from its bank. The interest rate on the loan is 9 percent. Assume there are 360 days in a year. Calculate the APR and rEAR assuming the loan is a simple interest loan with no compensating balance requirement. Do not round intermediate calculations. Round your answers to two decimal places. APR: % rEAR: % Calculate the APR and rEAR assuming the loan is a simple interest loan with a 20 percent compensating balance requirement, and PAR currently holds no funds at the lending bank. Do not round intermediate calculations. Round your answers to two decimal places. APR: % rEAR: % How much would PAR have to borrow if it needed $270,000 to pay bills and the loan required a 20 percent compensating balance? Round your answer to the neares dollar. $
A bank is considering using a “three against six” $2,000,000 FRA to cover its potential loss. The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a six-month Eurodollar loan and having accepted a three-month Eurodollar deposit. The agreement rate with the buyer is 4.6%. There are actually 92 days in the three-month FRA period. Which one of following statements is correct? Group of answer choices If the settlement rate is 4.8% three months from today, then the buyer pays the seller. To hedge the loss caused by maturity mismatch, the bank should be a seller of the FRA. Without the FRA, the bank will lose if the market interest rate drops at the end of three months. If the settlement rate is 4.8% three months from today, then the FRA is worth $1009.84 To hedge the risk caused by maturity mismatch, the bank could take the buyer’s position if it uses the Euro-Dollar Interest Rate Futures…
A bank is considering using a “three against six” $2,000,000 FRA to cover its potential loss. The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a six-month Eurodollar loan and having accepted a three-month Eurodollar deposit. The agreement rate with the buyer is 4.6%. There are actually 92 days in the three-month FRA period. Which one of following statements is correct? Group of answer choices To hedge the risk caused by maturity mismatch, the bank could take the buyer’s position if it uses the Euro-Dollar Interest Rate Futures instead. To hedge the loss caused by maturity mismatch, the bank should be a seller of the FRA. If the settlement rate is 4.8% three months from today, then the buyer pays the seller. If the settlement rate is 4.8% three months from today, then the FRA is worth $1009.84 Without the FRA, the bank will lose if the market interest rate drops at the end of three months.
Warning: Rounding in the calculation of monthly interest rates is discouraged. Such rounding can lead to answers different from those presented here. For long-term loans, the differences may be pronounced. Use the Estimation Rule for Long-Term Loans to estimate the monthly payment on a loan of $200,000 at an APR of 6% over a period of 25 years. The monthly payment is at least $
Please do it by hand. If not please do not respond. Write clear
(Related to Checkpoint 18.2) (Evaluating trade credit discounts) If a firm buys on trade credit terms of 5/15, net 90 and decides to forgo the trade credit discount and pay on the net day, what is the annualized cost of forgoing the discount (assume a 365-day year)? The annualized cost of the trade credit terms of 5/15, net 90 is %. (Round to two decimal places.)

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